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Summary:

As a boom of solar panels continues to be installed on buildings throughout the U.S., companies, groups and even every day people can make money off of funding this clean energy transition.

Apple's solar farm in North Carolina

There were a record number of solar panels installed in the U.S. on rooftops and on ground-mounted systems in 2012. Now both traditional financing companies and new types of investors are starting to get in on the trend of providing the funds for the high upfront costs of installing solar panels, in exchange for making some money back several years down the road. But the potential to make money in this way has only just started.

On Thursday solar installer SolarCity announced that it has signed up Goldman Sachs, and other investors, to create a $500 million fund to support leases for solar panels for home and business owners. With that much money, SolarCity can install some 110 MW worth of solar panels.

Apple Solar FarmSolar leases are a contract between the building owner and SolarCity, whereby SolarCity pays the upfront cost of installing the system, owns and maintains the panels, and the building owner pays for the monthly electricity for the power from the panels over around 20 years. As Ucilia noted on GigaOM Pro today, the residential solar leasing market alone is expected to grow from $1.3 billion in 2012 to $5.7 billion in 2016, according to GTM Research.

Some banks and even companies like Google have been willing to put hundreds of millions into these types of funds. SolarCity has been able to raise $1.7 billion in funding over its lifetime to finance installations from groups like U.S. Bancorp, Google, PG&E and Credit Suisse. Other solar financing companies — and the competition is now getting fierce — include Sungevity, OneRoof Energy, Sunrun and Clean Power Finance.

bSolar and  SI MODULE CLICKCONThere’s such a demand for solar leases and financing that even some companies are falling behind on getting funding for these businesses. SunPower said earlier this month that demand for its residential solar leases is far greater than the money available to finance them. Power company NRG Energy also wants to retry getting into this space, after trying out this market awhile back.

It’s not just banks and corporate do-gooders that want the opportunity to make a decent return — some 10 to 12 percent in some cases. Crowd-funding is starting to appear as an interesting blip on the radar. Startup Solar Mosaic says that it’s now raised $1 million from its crowd-funders for its solar panel systems, which offer around a 4.5 percent annual yield. Bloomberg New Energy Finance estimates that commercial‐scale solar panel systems can reach returns of 8 percent to 14 percent in states like Hawaii, Texas, New Jersey, and Massachusetts.

As big power players, upstart solar financiers and even everyday crowd-funders grow these funds and receive the returns, this market will start to expand significantly. As a boom of solar panels continues to hit the U.S., various parties can make significant money off this transition. Bloomberg New Energy Finance expects that residential solar panels could be installed on 2.4 percent of U.S. houses by 2020.

  1. I am a fan of solar and initiatives to kick start the domestic solar industry in the US are encouraging BUT the industry needs to watch it does not create its own bubble. In the UK, a high level of government subsidy was available and a whole new industry was created, effectively renting the roof on someone’s home. There was a big boom in solar panel installation whilst this lasted.

    When the government reduced the subsidies, as the cost of the installation was falling, the installation industry took a big dive.

    For me the domestic side of solar should be controlled

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  2. With the exception of an occasional rinsing off with a garden hose, there is no maintenance for solar panels. This is nothing but a myth that was invented by the solar leasing companies to convince you to lease instead of buy. The leasing companies charge so much more (up to 3 times more) than what you can purchase a solar system for that it is the consumer who is actually paying for any repairs and any imaginary maintenance on the leasing company’s solar system. A $0 down solar loan or one of the new PACE type (property assessed HERO) loans where the payments are made with your property taxes are a much better way to go than an expensive solar lease. This is primarily because when you buy instead of lease, you own the solar system and you get to keep the 30% federal tax credit worth thousands of dollars and you get to keep any other applicable financial incentives for yourself instead of giving it all away to some leasing company.

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